SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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Date of Report
(Date of earliest
event reported): April 12, 2002
A. O. Smith Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-475 39-0619790
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
P.O. Box 245008, Milwaukee, Wisconsin 53224-9508
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(Address of principal executive offices, including zip code)
(414) 359-4000
(Registrant's telephone number)
Item 5. Other Events.
On April 12, 2002, A. O. Smith Corporation (the "Company") issued a
press release announcing the Company's results for the quarter ended March 31,
2002 and its earnings outlook for 2002. A copy of the Company's press release is
attached as Exhibit 99 to this Current Report on Form 8-K (this "Current
Report") and is incorporated by reference herein.
This Current Report (including the exhibit hereto) contains statements
that the Company believes are "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical facts, including statements regarding the Company's
future financial position, business strategy, budgets, projected sales, costs
and earnings, and plans and objectives for future operations, are
forward-looking statements. Forward-looking statements generally can be
identified by the use of forward-looking words such as "may," "will," "expect,"
"intend," "estimate," "anticipate," "believe" or "continue" or words of similar
meaning. These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those anticipated as
of the date of this prospectus. Factors that could cause such a variance
include, but are not limited to:
o instability in the Company's electrical products and water
systems markets;
o the Company's inability to timely and properly integrate its
acquisition of State Industries, Inc.;
o the Company's inability to implement cost-reduction programs;
o adverse changes in general economic conditions; and
o competitive pressures on the Company's businesses.
Shareholders, potential investors, and other readers are urged to
consider these factors in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements. The
forward-looking statements included in this Current Report (including the
exhibit hereto) are made only as of April 12, 2002, and the Company undertakes
no obligation to update publicly such forward-looking statements to reflect
subsequent events or circumstances.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibit is being filed herewith:
(99) Press Release of A. O. Smith Corporation, dated April
12, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
A. O. SMITH CORPORATION
Date: April 12, 2002 By: /s/ Kenneth W. Krueger
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Kenneth W. Krueger
Senior Vice President and Chief
Financial Officer
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A. O. SMITH CORPORATION
Exhibit Index to Current Report on Form 8-K
Dated April 12, 2002
Exhibit
Number
Description
(99) Press Release of A. O. Smith Corporation, dated April 12, 2002.
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NEWS RELEASE A.O. SMITH CORPORATION
For further information contact:
================================================================================
MEDIA INQUIRIES: ANALYSIS/INVESTOR INQUIRIES: A.O. Smith Corporation
Edward O'Connor Craig Watson P.O. Box 245008
414-359-4100 414-359-4009 Milwaukee, WI 53224-9508
414-359-4000
NYSE: AOS AMEX: SMCA
FOR IMMEDIATE RELEASE
April 12, 2002
A. O. Smith announces strong first quarter performance
of $.50 per share earnings; improves full-year earnings forecast
Milwaukee, Wis.--Continued strong performance by its Water Systems
business and cost reductions at its Electrical Products unit enabled A. O. Smith
Corporation (AOS-NYSE, SMCA-AMEX) to earn $12.1 million or $.50 per share in the
first quarter of 2002.
Sales in the first quarter, ended March 31, were $371.9 million, an
increase of $53.7 million or 16.9 percent over sales of $318.2 million in the
first quarter of 2001. An $83.7 million increase in year-over-year sales for the
company's Water Systems segment more than offset a $30.0 million decline in
sales for the Electrical Products segment.
The significant increase in first-quarter sales for Water Systems was
attributed to the $84.1 million of sales associated with State Industries, which
was acquired on Dec. 28, 2001. The decline in Electrical Products sales
reflected the continued softness in the electric motor market.
First quarter 2002 net earnings were $12.1 million or $3.6 million
higher than net earnings of $8.5 million in the first quarter of 2001. On a
per-share basis, net earnings were $.50, compared with $.36 in the first quarter
of 2001. The company attributed the increased earnings to improved operating
earnings in its Water Systems segment, the elimination of goodwill amortization
of $1.6 million, and a decrease in interest expense of $0.6 million. The
increased operating earnings for Water Systems were due to additional volume
from State Industries and benefits of the State integration.
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a. o smith announces earnings add l
"We significantly improved our earnings as a result of the acquisition
of State Industries and cost reduction initiatives, despite an absence of growth
in our served markets," Robert J. O'Toole, chairman and chief executive officer,
observed. "We made very good progress during the quarter integrating the State
operations into our existing water heater business, and this also contributed to
our improved earnings performance."
"Electrical Products, although still experiencing weak demand in its
major motor markets, began to see the positive impact of our cost reduction
programs, as reflected by our improved operating margins," O'Toole continued.
"We are confident the improving cost trend will continue as 2002 progresses."
Water Systems
First quarter sales for the Water Systems segment were $175.7 million,
an increase of $83.7 million over first-quarter 2001 sales of $92.0 million.
First-quarter 2002 sales included $84.1 million of sales associated with State
Industries, which was acquired on Dec. 28, 2001.
First-quarter operating earnings for Water Systems were $13.6 million,
including $3.8 million of earnings associated with the State Industries
acquisition. The net $9.8 million of operating earnings for the base water
systems business compared with first-quarter 2001 operating earnings for the
segment of $9.9 million and included a $1.7 million non-recurring charge
associated with the consolidation of Water Systems' management staff.
Electrical Products
First quarter 2002 sales for Electrical Products were $196.2 million, a
decrease of $30.0 million or 13.2 percent from first-quarter 2001 sales of
$226.2 million. First-quarter operating earnings for the Electrical Products
segment were $15.1 million or $0.5 million less than the $15.6 million of
operating earnings for the segment in the first quarter of 2001 as adjusted to
exclude $1.6 million of goodwill amortization. Not withstanding this decrease in
operating earnings, operating margins improved from 6.9 percent to 7.7 percent.
The favorable trend in year-over-year operating margin for Electrical Products
was the result of cost reduction activities, including those announced in the
fourth quarter of 2001.
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a. o. smith announces earnings add 2
Outlook
"Our previously issued forecast for 2002 called for earnings in the
range of $1.40 to $1.60," O'Toole commented. "Although we continue to be
cautious about the timing and magnitude of the market recovery in 2002, we have
improved our earnings projection to a range of $1.60 to $1.70 per share. This is
based on the early and projected continued success of our cost-reduction
programs and the integration of State Industries and is based on share levels
currently outstanding. On the same bases, we expect second quarter earnings per
share to be similar to first quarter levels."
The company's earnings expectations for 2002 also are based on a number
of other assumptions, including: no declines in consumer spending or weakening
of the economy compared with current levels; normal U. S. weather conditions
during the spring and summer of 2002; and no material price changes for raw
materials, including steel, aluminum, and copper.
A. O. Smith will broadcast a live conference call beginning at 10:00
a.m. (eastern time) today. The call can be heard on the company's web site,
www.aosmith.com. An audio replay of the call will be available on the company's
web site after the live event.
Forward-looking statements
This release contains statements that we believe are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical facts, including
statements made in the
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a. o. smith announces earnings add 3
"Outlook" section of this press release, statements regarding our future
financial position, business strategy, budgets, projected sales, costs and
earnings, and plans and objectives for future operations, are forward-looking
statements. Forward-looking statements generally can be identified by the use of
forward-looking words such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "believe," "continue," or words of similar meaning. These
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those anticipated as of the date
of this release. Factors that could cause such a variance include the following:
instability in our electric motor and water products markets; our inability to
timely and properly integrate our acquisition of State Industries; our inability
to implement cost-reduction programs; adverse changes in general economic
conditions; competitive pressures on our businesses; and the potential that
assumptions on which we based our expectations are inaccurate or will prove to
be incorrect.
The forward-looking statements included in this press release are made
only as of the date of this release, and we undertake no obligation to update
publicly these statements to reflect subsequent events or circumstances. All
subsequent written and oral forward-looking statements attributable to the
company, or persons acting on its behalf, are expressly qualified in their
entirety by these cautionary statements.
A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is one
of North America's largest manufacturers of electric motors, with a
comprehensive line of hermetic motors, fractional horsepower alternating current
(AC) and direct current (DC) motors, and integral horsepower motors, as well as
one of North America's largest manufacturers of residential and commercial water
heating equipment. A. O. Smith Corporation has facilities in the United States,
Mexico, Canada, England, Ireland, Hungary, the Netherlands, and China and
employs approximately 15,000 people.
A. O. SMITH CORPORATION AND SUBSIDIARIES
(condensed consolidated financial statements -
$000 omitted except per share data)
Statement of Earnings
Three Months ended
March 31
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2002 2001
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Electrical Products $ 196,234 $ 226,253
Water Systems 175,693 91,982
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Net Sales 371,927 318,235
Cost of products sold 295,026 259,440
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Gross profit 76,901 58,795
Selling, general and administrative 53,204 38,123
Interest expense 4,177 4,801
Amortization of intangibles 81 1,733
Other expense 789 599
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18,650 13,539
Tax provision 6,528 5,010
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Net Earnings $ 12,122 $ 8,529
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Net Earnings Per Share of Common Stock (Diluted) $ 0.50 $ 0.36
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Average Common Shares Outstanding (000's omitted) 24,317 23,828
A. O. SMITH CORPORATION
Balance Sheet
March 31 December 31
2002 2001
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ASSETS:
Cash and cash equivalents $ 21,851 $ 20,759
Receivables 237,690 209,871
Inventories 192,578 194,706
Deferred income taxes 18,878 22,403
Other current assets 16,456 28,039
Net current assets-discontinued operations - 1,796
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Total Current Assets 487,453 477,574
Net property, plant and equipment 348,987 355,298
Goodwill and other intangibles 302,203 301,924
Other assets 166,579 159,127
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Total Assets $ 1,305,222 $ 1,293,923
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $ - $ 3,280
Trade payables 138,191 131,073
Accrued payroll and benefits 31,464 29,525
Product warranty 19,155 19,470
Income taxes 2,419 887
Long-term debt due within one year 13,272 13,272
Other current liabilities 55,949 58,443
Net current liabilities-discontinued operations 2,902 -
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Total Current Liabilities 263,352 255,950
Long-term debt 378,867 390,385
Other liabilities 130,277 133,556
Deferred income taxes 66,577 62,154
Stockholders' equity 466,149 451,878
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Total Liabilities and Stockholders' Equity $ 1,305,222 $ 1,293,923
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A. O. SMITH CORPORATION
STATEMENT OF CASH FLOWS
Three Months ended
March 31
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2002 2001
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Operating Activities
Continuing
Net earnings $ 12,122 $ 8,529
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation & amortization 12,297 11,411
Net change in current assets and liabilities 3,024 (27,610)
Net change in noncurrent assets and liabilities (5,516) (5,832)
Other 927 218
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Cash Provided by (Used in) Operating Activities 22,854 (13,284)
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Investing Activities
Capital expenditures (7,080) (9,520)
Acquisitions (2,050) -
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Cash Used in Investing Activities (9,130) (9,520)
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Cash Flow before Financing 13,724 (22,804)
Financing Activities
Debt retired (14,798) (20,666)
Other stock transactions 815 101
Dividends paid (3,094) (3,061)
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Cash Used in Financing Activities (17,077) (23,626)
Discontinued
Cash Provided by Discontinued Operations 4,445 44,201
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Net increase / (decrease) in cash and cash equivalents 1,092 (2,229)
Cash and cash equivalents - beginning of period 20,759 15,287
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Cash and Cash Equivalents - End of Period $ 21,851 $ 13,058
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